By offering prospective employees real responsibility, access to management, and work schedule flexibility, your small business can compete in today's competitive hiring market
Small-business owners usually feel at a disadvantage when it comes to hiring talented, qualified employees. Where large corporations can provide attractive benefit packages, smaller firms are too often constrained by the cost of such programs. But Daniel Solomons, president and CEO of Hyrian, a recruitment-process outsourcing firm based in Los Angeles, says that entrepreneurs do have some perks up their sleeves, if only they know what to emphasize. He spoke recently with Smart Answers columnist Karen E. Klein. Edited excerpts of their conversation follow.
Why do small businesses have trouble attracting and keeping good workers? There are a number of reasons. The first thing I hear from candidates is the question of stability. There's a perception often on the part of the candidate that there's a certain instability associated with smaller firms. I don't think that's always correct. In fact, there are reasons it could be very unstable to work for a large company because you don't necessarily know what's happening with the firm financially.
But the dot-com bust, which was particularly profound here in Southern California, contributed to a feeling that smaller companies are less stable, more lean, and perhaps don't provide the same opportunities for upward mobility. There even are sometimes simple disadvantages; things like the smaller company's offices aren't as nice.
How can business owners emphasize the benefits of working for a smaller firm? Small companies certainly should ensure job candidates that they do everything they can to provide as much security for people as they can within their budgets. The other thing is to provide benefits if at all possible. I founded my own company, and I know what it's like to be self-funded. But I also think a lot of small companies don't realize how reasonably inexpensive benefits can be. They say, "Oh, we can't afford dental, or disability." But when you compare insurance premiums vs. the thousands of dollars you lose when a really good employee leaves, it doesn't really make a lot of sense not to do it.
The other thing is that you can encourage a candidate to look at a job situation holistically. Yes, a larger company might have a disability plan that your firm doesn't, but a small company can offer a really ambitious, bright person the chance to learn a lot more. They'll be getting a lot more job responsibility right up-front and will have the ability to directly influence the company's growth and development. A smaller company that offers solid health coverage, and a 401(k), and vacation time should be competitive. A job candidate can always go out and buy a vision plan if they really need it. What's more important is that the employee can test new ideas or business practices and work independently.
What other things can small firms hold out to tempt potential employees? The first thing is, they can hire faster. They typically don't have hiring committees and hierarchies of management that have to give approvals. So they can move quickly to secure quality personnel and make them feel valued.
Also, because smaller companies have more line-of-sight management, the CEO usually will work side-by-side with employees at every level. That should be emphasized when it comes to interviewing: The highest-level person possible should meet with job candidates and take an active role in follow-up. And while a corporate CEO likely will not follow up with a candidate after the interview, decision makers at a small business can keep the lines of communication open and steady with leading candidates, making an immediate, positive impression.
That kind of access to top management can also be sold as a plus for an employee who wants to get noticed and advance quickly. Of course, it depends on how upwardly mobile and ambitious the job candidate is. In a small company, if you sit there and watch the clock, and you're out the door at 5, that will also get noticed and could work against you.
You mentioned work environment. What can small firms do to make theirs more appealing? A small business should play up perks such as casual work environments, flexible work schedules, telecommuting, social activities, extra vacation and personal time, or any other supportive or family-friendly policies they offer that larger companies have difficulty supporting. If your small firm could possibly function with some employees working from home, at least part-time, try it. We've set up a pilot program for our employees in Minneapolis who have long commutes. We have allowed them to work from home in certain roles twice a week on nonconsecutive days. A lot of companies are afraid of doing this, but it can be the difference between keeping and losing a valued employee. You may not be able to pay as much as the corporation that wants to lure them away, but they'll stay with you because that flexibility is important to them.
Other important things are making the workplace fun and encouraging social networking so your employees get to know each other across departments and they make friends. Retention studies show that people don't like to leave jobs where they have lots of friends. We recently offered our employees free memberships at the health club next door. People go over to work out together at lunch or after work. The cost of this is a peanut for me compared to the cost of losing and replacing good people.
What about the physical environment of the entrepreneurial workplace? Small-business owners need to realize that the physical environment does matter to people. An office doesn't have to be gilded marble at the fanciest address in town. But people derive a great deal of their identity from their jobs, and they want to take pride in the place where they work. They feel good about themselves if they are proud to show their friends and family where they work.
Employers should not discount the importance of making the office a place that's dignified. This makes a big impression when you're hiring job candidates. Think about the use of color on the walls, putting in new carpet, arranging for a nice break room, and making sure the office is always clean and tidy.
Of course, the bottom line always gets down to salary. How can a smaller firm be competitive? They have to know the going salary rates for qualified team members and be prepared to match them, if not offer more money, to make sure they get the best talent. Some smaller company owners will say they can't afford to pay more. But if you're an emerging company and you want to grow, you're not going to get there with mediocre people. You need the best candidates—and they're not stupid people. They know they're the best, so you've got to make it worth their while to work for you. They might settle for a small company with lower benefits, but they won't come on board if you also expect to pay them less.
A smaller company might have an advantage here these days, actually, because their salaries may not be as highly scrutinized in terms of cost-cutting. They can make salaries competitive by researching what other firms are paying. I recommend Salary.com, which does surveys based on numbers from actual companies. You can pay a fee to join and search by company size and job title. The Labor Dept. also releases surveys with accurate information gathered from around the country.
In terms of guerrilla research, get on the job boards and search for the kinds of people you're looking for. Notice what kinds of salaries they're asking for and what they say they're being paid in their current jobs. The market is changing so fast, and it's so competitive right now, you have to be right in there. If the people you want to attract are all asking for $5,000 more than what you wanted to pay, you can't walk away from that! Really good people don't last long in the job marketplace, so you'll have to step up.
Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues
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